Netflix is set to gain more investors after announcing it will split its stock
Netflix is pressing ahead with its ambitious international expansion by splitting its stock to make it more attractive to retail investors.
The 7-for-1 stock split will mean investors will receive seven shares for each one they own. When the split occurs on July 14, Netflix’s stock will fall sharply to account for the extra shares, however the company’s market value, which stands at around $41 billion, won’t be affected.
The move is designed to make Netflix’s shares, which currently cost $680 a share, more accessible to a wider range of investors. Shares have been among the market's most valuable and have nearly doubled since the beginning of the year, surging to a record $703.50.
The change will put the California-based company’s shares within a similar price range to those of Facebook and follows expectations of a split following a vote among shareholders two weeks ago to increase the number of outstanding shares.
While the specific 7-for-1 split is unusual, Netflix shareholders would have taken confidence in the fact that Apple did the same last year and has enjoyed a stock surge of 37 per cent since then. Over the last two and a half years Netflix has gained an additional 29 million subscribers and now boasts a total of 60 million worldwide.
The split announcement will pave the way for the massive expansion operations planned for next year which will see the online streaming service available in 200 countries.